Alabama Amends State Income Tax Exemption for Overtime Payments
In November 2023, Alabama enacted a law exempting, from Alabama state income tax, amounts received by full-time hourly wage-paid employees as compensation for overtime worked. On May 17, 2024, Alabama amended the Overtime Exemption Act, changing what overtime pay is exempt from Alabama state income tax. U nder the amendment, starting October 1, 2024, overtime paid in accordance with the Fair Labor Standards Act (FLSA) will be exempt from Alabama state income tax. For employers governed by the National Railway Labor Act, the exemption will be based on overtime compensation as stated in relevant collective bargaining agreements. Quick Hits Under the amendment, the Alabama overtime income tax exemption will be based on overtime paid in accordance with the FLSA. For employers governed by the National Railway Labor Act, the exemption will be based on overtime paid as stated in relevant collective bargaining agreements. The amendment applies from October 1, 2024, until June 30, 2025. As many...